Business Plan for Project Karagwe

January 2000 Janua ry

SECTION P
Executive Summary 2 Company Overview 3 Products & Services 4 Industry & Marketplace Analysis 5 Marketing Strategy 8 Operations Strategy 11 Development Strategy 13 Management Team 14 Financial Summary 15 Offering 18 Appendix AMaps 20 Appendix BSchematic Diagram 22 Appendix CRE Enterprises 23 Appendix DSurvey Description 24 Appendix EBoard of Advisors 25 Appendix FResumes of Founders 27 Appendix GFinancial Statements 28

AGE

Company . Ambeeka Energy Solutions will empower the worlds underdeveloped communities through application and Overview of solar the wind energy technologies. The company will become the worlds leading provider ofenergy (RE) products and services, with projects potentially spanning all seven continents, by renewable 2014. Industry & Marketplace . One third of the worlds population has no electricity. The majority of these live in rural, remote areas of the worlds poorest nations. Global development is a multi-billion dollar industry, with Analysis people the World Bank providing huge sums of money to fund large-scale projects. In the past ten years, global electricity has grown demand by 40%. During this time, the use of RE has expanded at ten times the rate of fossil fuels. Experts predict worlds electricity demand could triple by 2020, a colossal increase that will be fuelled by the that the of developing industrializationcountries. As a specialty provider and integrator of RE systems designed for developing communities, position itself to capitalize on this explosive trend. Ambeeka will establish its first project in Ambeeka will Tanzania, Karagwe, which lies near the western shore of Lake Victoria, deep in sub-Saharan Africa. Products & . Ambeeka will introduce affordable electricity to Karagwe by offering attractive financing for solar Services electric systems. This will enable families to make purchases in small monthly installments, in the same options way a consumer would buy an automobile in the United States. In addition, Ambeeka will construct a 15,000that solar/wind power station and community center, where services such as electric coffee processing, water watt pumping, refrigeration, computing, telecommunications access, and Internet browsing will be sold. This community center also will serve as a nucleus of education, where Karagwe residents will be exposed to a contagious spirit of entrepreneurship. The services provided here will enable, motivate, and educate people to start new businesses. In way, this Ambeekas presence in Karagwe will substantially boost the regions economic prosperity. Marketing . Karagwe is a dispersed farming community of 350,000 people. The area is so remote that lines may Strategy never be extended there, and only 2% of the population has electricity. Ambeekas target customer power is a Karagwe family that earns about $700 per year. A basic solar electric system will be priced at $288, or $24 per Market month. research conducted in Karagwe strongly suggests that this price is feasible, despite the fact that it representstypical familys annual income. Currently, Karagwe families use crude and dangerous kerosene lamps to 45% of a light homes, and expensive dry-cell batteries to power their radios. A solar electric system is safer, more their provides reliable, better lighting, and promises better value than the alternatives mentioned above. Construction of the power and community center will advertise Ambeekas dedication to a sustainable, long-term presence station community. Ambeeka has partnered with a local company called the Columbia Solar Electronics Workshop within the (CSEW). with CSEW, Ambeeka will sponsor informational forums to educate customers about the economic Working financing, benefits of the technology behind solar electricity, and the use of electricity in cultivating a prosperous economy. Operations and . In October 2000, Ambeeka will begin building the power station and community An expert in Developmentthe RE field has been recruited to design this station, and to oversee its construction. CSEW will run center. all operations of the business in Karagwe, including inventory handling, payment collection, product distribution, maintenance repair. All power systems will be sold to customers as pre-packaged kits, assembled by CSEW and employees. Management . Jason Spellberg, Ambeekas founder, is completing his MBA in Entrepreneurship at University of Colorado. He has traveled extensively in East Africa, and has forged a business partnership with Team the Gaspar owner of CSEW. As permanent employees, the founders will seek, identify, and finance lucrative new Makale, project opportunities all over the world. Mr. Makale will also oversee Ambeekas operations in Karagwe. Summary of Financials and Offering to . In Karagwe, solar kit financing will generate almost $800,000 Investors and $2.7 million in accumulated cash, by 2006. Ambeeka will seek $1 million in a single round of of net income, financing to fund the construction of the power station and community center. Ambeeka will seek this capital seed from accredited investors, non-profit relief agencies, or possibly as a partnership with a global technology private interested company in penetrating emerging markets. Ambeekas presence in Karagwe will drastically improve the communitys prosperity, thereby building real demand for electronics and telecommunications products and services. In capital and strategic support, Ambeeka will offer an investor equity, and will additionally offer a partner exchange for company direct, unlimited access to these markets at the grass-roots level. Ambeeka is dedicated to improving the lives of worlds underprivileged people by promoting the use of clean renewable energy. Therefore, Ambeeka also the offers investors association with this noble initiative. 2

The Ambeek derives from an ancient Sanskrit word meaning energy or illumination. therefore, the commitment of Ambeeka Energy Solutions will be to spread technologies for harnessing name a Appropriately, renewable energy (RE). The term renewable refers to sources of energy that can never be diminished or exhausted, such as and sun. The most common commercial RE technologies are photovoltaic (PV) modules, wind turbines, wind and, increasingly, fuel cells, which produce electricity from solar radiation, wind, and hydrogen, respectively. Vision Statement To Become the World Leader in the Creation, Development, and Deployment of Technologies that To Become the in and Deployment that Converge the A dvancement of Human Civilizations with that of the Environmental Condition Converge the Advancement

Three-Year Statement

Mission

T P rofita bly an d S aiinablly In tr uce Re n wab Ene gy To Pr ab Susta n rodu e new able erg y In t e W rld U nde rde elope Comm un nto the Wor s Un e eve ed o mu nitie

Current Status Colorado, USA, during the first quarter of 2000. The company will serve as a for-profit holding, investing, and over the world. Ambeeka will immediately specialize in providing electricity and electric services for rural communities, and will commercial applications by allowing customers to finance the cost of these systems over time. Second, the company villages. At these centers, people will be able to purchase services ranging from crop processing to refrigeration to Objective s company will aggressively expand into a global provider of RE products and services by seeking new opportunities in provider of RE products and services, and will operate Research & Development divisions for creating innovative Century. This business plan will present novel Ambeekas strategy for getting started, by establishing a profitable and sustainable RE business in Karagwe, Tanzania.

Description of Ambeeka will offer financing packages for home and commercial-scale solar electric systems. The retail Services price of a electric system in rural Africa is around $800. Ambeeka will enable Karagwe customers to small solar systems purchase in affordable monthly installments, similar to the way most people in the United States purchase automobiles. These financing options will be especially popular in poor communities such as Karagwe, where affordability preventative wedge in a customers ability to buy. This business plan will mainly describe the financing drives a aspect of Ambeekas operation in Karagwe. To solidify peoples confidence in these financing options, and to demonstrate the companys dedication to community, a 15,000-watt solar/wind power station and community center will be constructed in Karagwe. A the number of end-user services will eventually be provided at this community center, such as coffee bean processing, food and refrigeration, battery charging, water distilling, computing, telecommunications access, and Internet storage browsing. an educational center will be instituted, where customers will learn how to use electricity and addition, In start new businesses, or to expand existing ones. Most of these services will be provided within a year after technology to Ambeekas initial establishment in Karagwe, but eventually they will generate as much as 75% of the companys revenue. these All ofservices will be designed to help Karagwe residents augment their incomes. In this way, Ambeeka hopes to foster economic activity, and thus prosperity, within the community. This business plan will not describe the center aspect ispart of the companys longcommunity of Ambeekas operation in detail, but the offering of these servicesfor development in range plan Karagwe. Proprietary In Karagwe, and in all other project sites, Ambeeka will seek partnership with a local organization to help Rights with operations, marketing, legal negotiations, and other important aspects of conducting business. Ambeekas Karagwe partner in is a natively owned company called the Columbia Solar Electronics Workshop (CSEW). CSEW was founded 1999 by Mr. Gaspar Makale, a Tanzanian electrical engineer and entrepreneur. Mr. Makale and Mr. in April Ambeekas Spellberg, founder, are close friends, and have been in business together for close to two years. It is virtually for any foreign company to conduct effective or sustainable business in a poor, developing impossible without trustworthy local contacts. Besides CSEW, there is no company in Karagwe that has the technical community capability, or the entrepreneurial innovation, to establish a joint venture of this kind. As such, Ambeeka is confident that no foreign other company will be able to enter this market. Stage of Although fifty Development years of market exposure have proven RE technologies to be unequivocally reliable and commercial durable, the RE industry is still in its infancy, and the electricity markets in developing parts of the world remain almost completely untapped. A business solution is needed to meet the challenge of profitably selling this expensive, technology equipment to people with meager incomes. In the past five years, a number of strategies have high been implemented in rural, developing markets with astounding success. Almost all of these models have extended a credit micro-or financing option to their customers. These successful companies, which will be further discussed in the Industry Analysis section, have proven the efficacy of the business model that Ambeeka will apply in Karagwe.

Industry Analysis As an RE service provider targeting emerging markets, Ambeeka will compete in the industry known as Renewables Village Power (RSVP). RSVP is a small, but fast-growing subset of the gigantic global energy Sustainable for which is industry, currently experiencing an economic revolution. One significant characteristic of this revolution has been astonishing growth. Over the past ten years, for instance, the worlds demand for electricity has increased by Experts tripl by 2020. 1 Becaus 40%. predict that, as industrialization sweeps developing countries, current demand could new electricity users live in remote areas, most of this increased demand has been, and will continue to e e so many serviced by RE. As a result, renewables are by far the fastest growing segment of world energy use, as is shown be, 2 in the following chart.
27% 24% 21% 18% 15% 12% 9% 6% 3% 0% Global Trends in Energy Use, Annual Growth Rates (1990--1998)

The second trend of importance is privatization and deregulation. Over the past five years, this has been a global contagion, especially in developing countries, where governments continue to implement aggressive policies to attract designed foreign investment. Tanzania, for instance, adopted the National Investment Promotion and Protection Act in which guaranteed the privatization of several key industries, including energy. The opening of these 1990, economies the proliferation of scores of small, entrepreneurial energy companies striving to profitably satisfy the has sparked for rural energy development. Some, such as the Grameen Bank of Bangladesh, the Solar Electric Light need Fund of and Soluz of the Dominican Republic, have developed profitable business models based on selling Thailand, electric systems through micro-credit 3 Meanwhile, large companies such as Enron, Shell Oil, and solar Petroleum/Amoco have established dedicated RE divisions, and are aggressively executing multi-million dollar arrangements. British RE projects in places such as Indonesia and South Africa. But despite this recent surge of activity, the RSVP industry still faces some imposing challenges. For example, the majority of people who most need RE technologies still cannot afford them. Substantial increases in endvast user purchasing power have remained elusive, and, as a result, sales are not close to what they could be. Consequently, manufacturers have been unable to drive economies of scale enough to cost-compete with fossil fuels. Another RE problem
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is the lack of skilled RE technicians in developing countries. There are only a handful of training centers in the teaching RE system installation. Finally, international turmoil remains an imposing obstacle. In many world countries, political and economic instability has prevented the long-term investment and presence needed to sustain RE projects. These challenges are typical of any global industry that is only just beginning to mature, and real progress is being to address them. Over the past decade, for instance, PV production costs have been reduced by 80% (an additional made 50% is required to cost compete with coal-fired electricity). Furthermore, experts predict that economic to 75% 4 As industrial development in emerging countries will lead to a 100% increase in world income by and 2020. demand for electricity, RE training centers are being established in the developing world, such asprosperity builds the respected Karadea Solar Training Facility in Karagwe. Furthermore, despite civil wars and social unrest, highly there are developing countries, like Tanzania, where political stability harbors fantastic economic opportunity. scores of experts Many predict that this global Energy Revolution contains the seed that will become the worlds premier growth of the s t Century. industry 21 Marketplace Tanzani Analysis . Tanzania is the largest and most peaceful nation in East Africa. The country has demonstrated over 38 a political stability, and is governed by a multiparty democracy based on English common law. Tanzania has years of average annual economic growth rate of 3.5% over the past ten years, however inflation currently lingers at posted an 6 13%. Tanzanias GDP is expected to grow at 5.5% annually through Agriculture is the nations primary accounting for 56% of its GDP, and employing over 90% of its workforce. Only 24% of Tanzanias population 2002. industry, live in areas, meaning that the countrys 32 million people are widely dispersed over an area more than twice the urban California 7 Between 1986 and 1991, demand for electricity in Tanzania grew at an average annual rate of size of . trend that is10.2%, a to continue. Over 75% of Tanzanias electricity consumers are served by hydroelectric expected and the power, country experiences generation shortfalls during drought conditions. Almost all of Tanzanias electricity usage is confined to its urban 8 areas. Karagw . Karagwe is a remote farming community in the northwestern corner of Tanzania, about 100 kilometers 9 The the region experiences e western shore of Lake Victoria, at a geographic position of two degrees south from latitude. two dependable rainy seasons per year, and receives an annual average of about five peak sun hours per day, roughly more 10% than Denver, Colorado. About 350,000 people, or 60,000 households, live in this region, which is situated on a sloping ridge at an elevation of 1,650 meters (5,400 feet) above sea level. The prominence of this ridge wide, surrounding above the plain leaves it exposed to the tropical trade winds, which consistently blow from the west. There are few regions in the world that boast such abundant RE natural resources. Almost every household in Karagwe is by a plantation of several hectares, and coffee is the communitys chief cash crop. The average yearly income is surrounded about per family, and, though this is strikingly poor by western standards, Karagwe is one of Tanzanias $700 prosperous rural most communities. Customer Analysis is an extremely dispersed village, with 350,000 people living in an area of 3,200 square kilometers. Karagwe result, As a only 1.4% of Karagwes most centralized homes and businesses are electrified by the regional utility grid, while are electrified with solar power. The remaining 98% have no hope of seeing the grid extended to their 0.6% during homes the next ten 1 0 Residents of Karagwe realize that modernization cannot take place without electricity, years. and that access to electricity will significantly enhance their economic prosperity and quality of life. As a result, it surprise that 100% of the fifty or so Karagwe residents surveyed during the summer of 1999 indicated a strong is no 11 desire to in a financing program that would allow them to afford a solar electric participate system. Karagwe families live in large houses, typically constructed of brick and concrete. Each house has three to bedrooms, a kitchen, a living room, a washroom, and an animal pen. Families submit no property taxes or five mortgage Furthermore, because Karagwe is a farming community, residents spend very little on food, except payments. for the
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few items, such as rice and fish that must be imported from surrounding districts. Very few people in this possess village an automobile, and those who do earn three to ten times more than the average yearly income. Aside from a of bars, restaurants, grocery stores, and weekly farmers markets, Karagwe offers very little for the handful Because there is not much in this community to spend money on, Karagwe families tend to retain a purchasing consumer. 12 power greater than half of their annual that is Nevertheless, due in large part to the inflationary pressures banking income. crises that have plagued Tanzania ever since the 1960s, people are generally unfamiliar with the and conceptmoney. Only in the past few years have stabilized banks begun to earn the trust of Tanzanian consumers, saving of the rural parts of the country, this trend is proceeding quite and in slowly. Despite these simplistic financial tendencies, the typical Karagwe resident is quite sophisticated, and understands solar electricity. Karagwe is home to Africas most distinguished solar training facility, where benefits of the Africa Operations Officer, Mr. Gaspar Makale, is chief of faculty. Because of the international recognition Ambeekas of this Karagwe residents know that solar electricity represents a clean, safe, and reliable way to power their school, Unfortunately, however, even a small solar electric system costs about $800 retail in Africa, and only the homes. richest can afford this price. As a result, most families continue to light their homes with crude kerosene lamps, families power and to their radios with inefficient dry cell batteries. Nevertheless, the demand for solar electric systems latently exists in Karagwe, and it is up to Ambeeka to tap this market potential by making these systems affordable for the Karagwe average family. Competitor Analysis Competing . Because solar electric systems are so expensive in Karagwe, they are viewed as luxury Almost every family would love to have one, but affordability is a preventative issue. As such, people must use Technologies items. more conventional methods of lighting their homes. Kerosene and dry cell batteries are readily available in neither item is Karagwe, but particularly cheap. Kerosene sells for about fifty cents per liter, and a typical family uses four to six per month; many organizations, such as schools and health clinics, use twenty to fifty liters per month. Dry liters batteries retail for about $3.00, and may last two or three weeks at the rate most families use their radios. Some cell families gasoline gensets, while still others own automobile batteries, which they charge with gensets, or at a also own station in the central part of the 13 Ambeekas chief competition in Karagwe is certainly kerosene and grid village. and solar has several advantagesdisposable First, kerosene lamps are crude and dangerous; it is easy to batteries, over them. an adult in Karagwe who has been burned, at some point in his or her life, by a kerosene lamp leaking, find spilling, or exploding. Furthermore, kerosene lamps provide lighting that is only somewhat better than a large completely and they candle, tend to be noisy and smelly during operation. Dry cell batteries are expensive because they must be replaced so frequently, and their disposal poses a serious environmental threat. Also, many appliances cannot be powered batteries. A solar electric system, on the other hand, is clean and safe, and provides the familiar fluorescent, white with light can illuminate an entire room. Furthermore, a solar electric system can be used to power any electric that offers modularity, flexibility, and expandability, so that one single power source can be used for the houses appliance. It every electrical need. Additionally, these systems are extremely reliable, and require only minimal maintenance on, periodic replacement of, the battery. If well maintained, a solar electric system will last for thirty years. Solar and electric are more expensive than conventional alternatives in the short-term, but in the long run provide a far systems value the superior for money. Competing Service . Aside from Ambeekas partner, CSEW, there are no businesses or Providers solar electricity in Karagwe. Furthermore, there is not a single organization in all of northwestern organizations providing that offers Tanzania financing for solar electric systems. The national utility, the Tanzania Electric Supply Company (TANESCO), has no intention of expanding the utility grid into the periphery of Karagwe for at least ten Furthermore, this company has no understanding of solar electricity, and maintains only a minimal years. presence in TANESCO is not equipped to effectively compete in this Karagwe. marketplace.

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Target Market In order Strategyto make solar electricity affordable, Ambeeka will offer families and businesses the option of paying for their in twelve monthly installments. The smallest kit offered will be priced at $24.00 per month. This translates system a year-end price of $288, which is a tremendous saving over retail. Because people in this region maintain a into purchasing power equivalent to about 50% of their annual income, Ambeekas principal target market is families that earn at $600 least per year. It is estimated that roughly one-third of Karagwes households earn this amount or more, meaning 14 that Ambeekas primary target market in Karagwe consists of about 19,000 families. Service Financing . Many micro-credit programs have failed in developing communities because customers have Strategy Terms to default on their loans. It can be extremely difficult both logistically and financially to repossess been allowed in remote equipmentvillages of foreign countries. To circumvent this problem, Ambeeka will offer pre-financing plans to its customers. Under the terms of these pre-financing options, customers will have to pay their entire balance Ambeeka will give them a system. There are two reasons why this is necessary in Karagwe. First, people in before developing countries often do not understand the concept of credit, and, especially when an American company is the regularly assume that credit means free. Second, industrialized nations have repeatedly allowed lender, governments and developing world to default on their debt. People in these communities, Karagwe included, businesses in the accustomed to receiving free handouts from the World Bank and industrialized governments. It is unlikely are that Ambeeka can establish a high-growth, sustainable business in Karagwe if expensive electrical systems are money is but provided, not collected. As such, customers will pay for their systems first, in entirety, before they receive them; no exceptions will be allowed. Because the financing plans will have one-year terms, Ambeeka must offer customers something while they their electric systems. This is where the community center will be useful. During the terms of their financing pay for contracts, customers will be allowed to utilize all services at this community center free of charge. These Ambeekas will end upon fulfillment of the financing agreement, or if a customer defaults on several payments. This strategy privileges will Ambeeka to collect money before distributing systems, and will encourage customers to fulfill their allow agreements. Ambeeka will gladly accept down payments for customers desiring shorter financing financing terms. Solar Electric . Ambeekas solar electric systems will be sized to meet the needs of a typical Karagwe Kits few Karagwe household. the need to power anything more extravagant than a few fluorescent lights and a Very homes have and therefore these systems will be small by western standards. Each system will come with a solar panel, a deepradio, cycle a charge controller, lights, a radio, wiring, connectors, and mounting materials. In order to serve the battery, high demand for affordable solar electric systems in Karagwe, all systems will be sold as pre-assembled kits. These expected kits be designed to be so simple that end-users will be able to perform the installations themselves. In this will Ambeeka will minimize the size of its technical staff. Initially, there will be three kit sizes Table 1presents way, offered. price comparison of Ambeekas introductory product line. For homes or businesses requiring morea spec and customized systems will also be available. Furthermore, as the community becomes more prosperous, people power, will develop more extravagant tastes for electric appliances and equipment, such as television sets, satellite dish refrigerators, and computers. Ambeeka will continuously readjust this product line according to customers receivers, power In addition, attractive trade-in and scale-up plans will be offered to customers in subsequent years, so needs. smaller systems can be traded in and up-graded to larger that ones. Table 1. Ambeeka's Initial Product Line Kit Size Components Price/Month Price/Year Gross Margin 1 13 watts 1 light, 1 radio $24.00 $288.00 72.46% 2 30 watts 2 lights, 1 radio $48.00 $576.00 80.00% 3 48 watts 3 lights, 1 radio $72.00 $864.00 94.59%

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Ba se d o n re se arch co nd u ct ed i n K ara g we by M r. S pe llb e rg, su mm er 1 99 9

Pricing Ambeeka Strategy will price these kits as low as possible while still yielding an attractive profit. Based on Winrocks experience between 1994 and 1998, it is expected that a family living in an impoverished, rural in Indonesia 1 5 With the community agricultural will surrender about half of its yearly income for a necessary item such as reliable electricity. pricing strategy that Ambeeka has adopted, Karagwe consumers will pay less than half of what a comparable electric system would cost from a typical African solar retailer. Distribution Strategy The community center will be used as Ambeekas administrative office and distribution hub. Most of the of the solar components electric kits will be shipped by sea from suppliers in the U.S. or Europe to the Indian Ocean port of Dar es then trucked overland to Karagwe. Ambeeka will also attempt to identify reliable suppliers in South Salaam, reduce its Africa to dependence on overseas shipping. Upon arrival in Karagwe, CSEW will be responsible for assembling all complete solar electric kits, ready for installation. When customers have satisfied their components into schedules, payment they will be cordially thanked for their business, and invited to pick up their kits from the community center. time, customers will be given written instructions on how to install and maintain their new systems. During At this payment period, and throughout their duration of ownership, all Ambeeka customers will be invited to attend their free educational workshops on using, maintaining, optimizing, and expanding their solar electric systems. Advertising & Promotion Ambeeka Strategy will rely greatly on publicity and word-of-mouth advertising to promote these financing plans. The construction of a 15,000-watt solar/wind power station and community center will be tremendous news in Karagwe, will therefore serve as a very useful promotional tool. Residents will be unable to avoid noticing the sheer scale of and this project. Over 100 people will be employed in this undertaking, and every newspaper and radio station in the region publicly monitor its progress. Like many rural agricultural villages, Karagwe is a tight-knit community, and will people be extremely social. Ambeeka will have to do little to instigate excitement and conversation about this tend to Once built, the generating facility, featuring a 10,000-watt wind turbine perched on an eighty foot tower, and a project. 5,000watt array of sleek solar panels mounted on a 10,000 square-foot scaffold, will serve as a constant advertisement electricity that Ambeeka of the offers. Due to the visibility of this project, Ambeeka will ensure that high standards of professionalism are maintained at all Embroidered uniforms will be distributed to the CSEW technicians that maintain and operate the times. center. New, community high-quality equipment will be purchased, and the community center itself will have a clean, modern Service will be prompt and courteous, and technicians will be well trained and well paid. To complement design. publicity aspect, Ambeeka will also post billboards in the heavily trafficked downtown area of the Karagwe the district. purpose of these billboard advertisements will be to inform and remind customers of scheduled The main training sessions and technical demonstrations being held at the community center. In addition, posters will be educational used to new service offerings or price adjustments, as needed. Finally, professionally printed brochures, announce concise descriptions of the financing plans offered, as well as general information about solar energy, will be featuring widely distributed. Sales Gaspar Makale, the founder and executive officer of CSEW, is a native of Karagwe, and has been installing Strategy solar systems there for eight years. Mr. Makales expert reputation is common knowledge in the community. energy sales All and operational responsibilities will be contracted to CSEW, taking advantage of Mr. Makales contacts and stature in Karagwe as a solar energy professional. Because CSEWs name is already well known to the customers will community, be dealing directly with a local company that they trust. A customer service office and reception desk be established at the community center, and CSEW will collect payments at this location. In exchange for will services, and for using the CSEW name to generate trust and loyalty, Ambeeka will pay CSEW a contracting fee these based on sales volume. Therefore, CSEW will have an incentive to aggressively generate sales by subscribing new in whatever fashion they deem appropriate or customers, effective. Marketing & Sales Ambeekas Forecasts projected target market in Karagwe is about 19,000 families. There are 58,000 families in the region electricity. However, these pre-financing plans will be expensive. Furthermore, customers will have to without pay all
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by Wi nr ock I n te rn at io n al f o r U S AI D , 1 99 5

of their monthly installments before receiving any equipment. Ambeeka recognizes that this will initially many potential customers. However, the construction of the power station and community center, as well as dissuade the partnership with CSEW, will help to reinforce Ambeekas trustworthiness, and should neutralize some of concerns. In addition, Ambeeka will allow subscribed customers to use the community center for free during these their contract term. This means that customers will be able to enjoy free access to computers, refrigeration, water coffee bean distilling, processing, telecommunications access, and other services, for up to a year. Ambeeka anticipates about 250 families in 2001, the first year of operation. After one year, Karagwe residents will subscribing delivery of witness the solar electric systems purchased the previous year by their friends, neighbors, and relatives. The demand for these financing contracts will therefore increase exquisitely over the next five years, as Ambeekas becomes confirmed, and its presence accepted, by the community. Furthermore, similar projects in other parts trustworthiness of the have demonstrated that the availability of energy systems motivates people to increase their income by world harder, and then to save more of that income, in anticipation of having something valuable to buy. As a result, working more Karagwe families will be able and willing to afford Ambeekas financing plans over time, and the growth rates into Table 2 shows sales and revenue forecasts for the built Ambeekas revenue forecasts reflect this expectation. years 2001 2006. Table 2. Sales & Revenue Forecasts 2001 2002 2003 2004 2005 2006 Units Sold 250 750 1,875 3,750 5,625 8,438 Revenues $84,240 $252,720 $631,800 $2,843,100 $1,263,600 $1,895,400

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Damien Bonaphaite, a primary school teacher in Karagwe, arrives home after a long day of work. It is time in night- Africa, and pitch black envelops the quiet community. There are no street lights, no glows in neighbors windows; only the brilliant stars of the southern cross provide illumination. But on this night, Mr. the Bonaphaite arrives to find his house teeming with activity. The solar electric system he spent a year has finally arrived, and his family is already putting it to good use. His wife is busily cooking in the buying kitchen, son studiously doing homework, and his two youngest children playing Monopoly, all possible his eldest to the due streaming radiance provided by the fluorescent lamp in the living room. Had this been a typical night in a typical Karagwe house, Mr. Bonaphaite would have to wait his turn to use one of the households two kerosene lamps, for he has about thirty exams to grade. In other words, he would be up late, long after his family had retired for the night. But as he greets his family working and playing under this new artificial Bonaphaite realizes that the typical Karagwe evening has now changed sun, Mr. forever. Operations Customers Strategy will start their lifetime relationship with Ambeeka upon receipt of their first solar electric kit. In time, they learn to effectively apply the full potential of solar energy, and they will completely replace archaic kerosene will and dry lamps cell batteries with the solar electricity that will become the routine hallmark of the future for communities like Karagwe . All of Ambeekas operations in Karagwe will be contracted out to CSEW. Mr. Gaspar Makale, founder and CSEW, CEO of will serve as Ambeekas Chief Operating Officer for this project. Mr. Makale will facilitate dealings with the government, as well as with Karadea, an influential UN-funded non-government organization that Tanzanian heavily will be utilized, both in the construction of the power station, and in ongoing operations. Scope of Operations be responsible for conducting the following activities in CSEW will Karagwe: Operating and maintaining the power station and community center Placing supply orders and maintaining inventory Overseeing and orchestrating solar kit assembly and distribution Collecting customer payments customer repair calls and manufacturers Servicing warranties Printing and distributing advertisements, such as billboards, posterboards, and brochures Subscribing new customers, and up-grading current and past customers Organizing informational forums and instructional demonstrations Ambeeka will negotiate the most attractive supply agreements possible, and all purchases will be made directly manufacturers at wholesale prices. Additionally, all shipping will occur via ocean, to the Tanzanian port of from Dar es Supplies will be trucked overland to Karagwe from the Indian Ocean coast. To avoid import Salaam. batteries duties, allwill be purchased in bulk directly from the Chloride Exide Company, a Tanzania manufacturer. Lights, charge controllers, wiring, connectors, and radios will be purchased in bulk from wholesale suppliers in the United Europe, States, or South Africa. Solar modules will be purchased directly from GlobalSolar, Inc, a Denver, Colorado based company with production facilities in India. Wind turbines and towers will be purchased from and installed by Light & Sagrillo Power, of Forrestville, Wisconsin. Building and security materials will be purchased in the United States,Africa, or Kenya. Ambeeka will be able to legally avoid all import duties through Mr. Makales association South Karadea, which enjoys complete exemption from most Tanzanian tariff laws. A temporary work force of about with 100 will in Karagwe to build the power station and community center. Sagrillo Light & Power will design, oversee, be hired orchestrate the construction project, with all Ambeeka officers present to oversee progress and to direct and funding.

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Ongoing Operations After the power station and community center are completed, a full-time workforce of three to five technicians maintenanceand two to four security agents will be hired and paid directly by CSEW for salaries in excess of $1,000 per year. Sagrillo Light & Power will thoroughly train CSEW technicians on proper maintenance and operation of power station. Insurance on hard assets will be purchased from a trustworthy agency in the Tanzania. CSEW will be charged with the responsibility of maintaining customer relations and satisfaction. This will include subscribing new customers and taking care of existing ones. CSEW will provide free maintenance or repair customers homes for one year after the equipments initial installation. Additionally, CSEW will help and visits to encourage to upgrade to larger power systems. Used components in good working condition will be accepted as customers in for trade- credit on a larger system. Furthermore, customers will be encouraged to return their used batteries to CSEW, which will send them out for proper recycling. Price credits towards the purchase of new batteries will be given customers who dispose of their old batteries in this to all manner. CSEW will be in charge of hiring and maintaining a trained local workforce. Because Mr. Makale has taught at the Solar Training Facility for six years, he knows who the most competent technicians are, and how to find Karadea in East them Africa. Ambeeka will provide the financial resources to help Mr. Makale attract these technicians to Karagwe. Operating Expenses Table 3shows Ambeekas anticipated operating expenses from 2001 2006. Table 3. Operating Expenses 2001 2002 2003 2004 2005 2006 CSEW Contracting Fees 5,000 10,000 20,000 40,000 80,000 160,000 Maintenance Expenses 3,000 3,150 3,308 3,473 3,647 3,829 Marketing Expenses 3,000 3,600 4,320 5,184 6,221 7,465 Insurance and Security 8,000 8,000 8,000 8,000 8,000 8,000 Total $19,000 $179,294 $24,750 $35,628 $56,657 $97,867

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Development Ambeeka Strategy will assemble a legal team and incorporate during the first quarter of 2000. After completing and revising the the company will begin to seek grants and investments from accredited private investors, multibusiness plan, relief national agencies, and, possibly, from large corporations. There will be some need for product development and prototyping in Karagwe. Solar electric systems consist of four components. The solar panel harnesses photon energy from the sun, converting radiation into electricity. main electricity is then conditioned by a charge controller before it is sent to a battery for storage. The charge This controllerthe batterys state of charge, preventing it from being damaged. The appliance, then, receives its regulates directly power from the battery. This system has been used and perfected for well over fifty years, and Ambeekas kits will deviate from this simple 16 Nevertheless, Ambeekas solar electric systems will be sold as prenot kits. Because customers will be expected to perform their own installations, Ambeeka will need to test design. assembled customerto these kits. Specifically, Ambeeka will assemble several versions in order to develop a packaging reaction that optimizes simplicity for the customer. Prototype testing will be conducted simultaneously with the method constructionstation, and will take less than one month to the power of complete. Once in Karagwe, Ambeeka and CSEW will focus on developing market demand for the financing services. these financing plans will be expensive, and because no equipment will be distributed until all payments have Because been received, it will take time for Ambeeka to earn the trust of Karagwes consumers. However, Ambeeka is this can be done convinced that within one year. First, utilization of CSEW, a Karagwe company that people already know and trust,help to lend credibility to Ambeekas promises. Second, the power station and community center will will symbol of represent a Ambeekas long-term commitment to the community. Finally, Ambeeka will lead by example; when working solar kits are delivered to the first wave of customers, Ambeekas trustworthiness will be ultimately By this time, Karagwes demand for these systems will be growing confirmed. fantastically. Development Timeline Project Karagwe will be launched in five major phases, during the following estimated dates: Phase 1Incorporation: Finalize business plan, incorporate, file with the U.S. SEC, build project JanuaryMarch, website: 2000 Phase 2Venture Financing: $1 million for construction of power station & community center, and to jump-start FebrurarySeptember, operations: 2000 Phase 3Construction of power station & community OctoberDecember, center: 2000 Phase 4Optimize solar kit packaging and November, assembly: 2000 Phase 5Subscribe customers to solar kit financing December, plans: 2000

Development Expenses estimates that the company will need $2,000 to $5,000 for incorporation and legal fees, which will be Ambeeka Mr. Spellberg during the first quarter of paid by 2000.

16

Ple a se s ee

Ap p e n d ix Bf or a sch em a ti c di ag ra m o f a so la r e le ct ri c syst e m

13

Company Ambeekas principal founders, Jason Spellberg and Gaspar Makale, will control the majority of the companys Organization equity. will employ both Mr. Spellberg and Mr. Makale on a full-time basis. A Board of Directors will be Ambeeka if and when assembled investors demand one. A Board of Advisers has been compiled in the meanwhile. This Board is composed with extensive experience relevant to the area of international rural development. All of these advisers of experts agreed Appendix Efor a detailed description of Ambeekas Board have to lend their assistance free of charge. Please see of Advisers, Appendix Ffor the resumes of Ambeekas and founders. Management Jason P. , Executive . Mr. Spellberg is Ambeekas primary visionary. He will earn his MBA degree Team Spellberg Officer Entrepreneurship from the University ofin Colorado at Boulder in May 2000. He has taken formal coursework in and PV bothwind system design and installation at Solar Energy International (SEI) of Carbondale, Colorado, arguably the most respected and well-known RE training facility in the world. Mr. Spellberg has many contacts in the industry, knows key people at the National Renewable Energy Laboratory (NREL), the Public Service Company of and Colorado, Inc., Energy Alternatives Africa, and the Tanzania Investment Center. He has traveled extensively in GlobalSolar, Africa, East and conducted market research on solar financing in Karagwe while doing an internship for CSEW during the summer of 1999. Gaspar V. , Africa Operations .Mr. Makale, Ambeekas principal co-founder, will serve as companys Officer Officer for Africa Operations. Mr. the Makale is a native of Karagwe, Tanzania, and is a master Makale electrician. In 1999, he founded the Columbia Solar Electronics Workshop (CSEW) with financial backing from Mr. CSEW offers a wide range of electrical services in the Karagwe area and beyond. Mr. Makale has installed Spellberg. over 500 solar electric systems in his career, and he has taught the PV systems design and installation course at the Karadea Training Facility for six years. For the last three of those years, Mr. Makale has served as the schools resident Solar chief of school itself is located in Karagwe, and is operated and funded by one of Tanzanias most important staff. The Government Organizations, the Karagwe Development Association (KARADEA), with which Mr. Makale has Nonvery ties. In a period of only eight years, the Karadea Solar Training Facility has arguably become the most close solar energy technical school in the Southern Hemisphere. Mr. Makale has earned the distinction Fundi, respected which, in means Master Technician. He is unquestionably Tanzanias premier installer of PV systems, and one Kiswahili most men in of the admired Karagwe. Administrative Expenses Table 4shows Ambeekas expected administrative expenses for 2001 2006. Table 4. Administrative Expenses 2003 2004 2005 2006 2001 2002 Salary, Mr. Spellberg 30,000 36,000 43,200 51,840 62,208 74,650 Mr. Spellberg 3,000 3,600 4,320 5,184 6,221 7,465 Benefits, Salary, Mr. Makale 2,500 3,000 3,600 4,320 5,184 6,221 Travel Expenses 4,000 4,800 5,760 6,912 8,294 9,953 Legal & Accounting Services 4,000 4,800 5,760 6,912 8,294 9,953 Expenses 500 600 720 864 1,037 Office 1,244 Total $44,000 $52,800 $63,360 $76,032 $91,238 $109,486

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Financial The financial Assumptions statements presented Appendix Greflect only Ambeekas forecasted sales of pre-financing in contracts in Karagwe. Revenues generated from community center services are not included in these forecasts, nor are revenues potential generated from projects in locations other than Karagwe. In addition, the financial statements assume that Ambeeka makes no capital expenditures during the explicit period of 20012006. Due to the nature of the financing plans, the bulk of customer payments will be collected before kit components will be ordered. This will prehave a positive effect on net income and cash Table 5 presents Ambeekas expected operational calendar, and why flow.reported net income and cash flow will be increased by the nature of the pre-financing shows plans. Table 5. Calendar
Sign-Up New Customers Collect Monthly Payments Order Kit Components Assemble Kits Distribute Kits Charge off Cost of Kits Sold

Operational Year 0 Year 1 Year

2 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Financial The following charts graphically illustrate Ambeekas growing net income and cash flow balance from 2001 Forecasts 2006.
$800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000

Net Income

$100,000 $0 ($100,000) 2001 2002 2003 2004 2005 2006

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$2,700,000

Cash
$2,250,000

$1,800,000

$1,350,000

$900,000

$450,000

$0 2001 2002 2003 2004 2005 2006

Capital Ambeeka requires $800,000 in start-up capital for the construction of the power station and community center. Requirements An additional infusion of $200,000 in cash at the end of 2000 will be needed to jump-start operations; this significant includes a safety cushion in case of financial emergency. Ratio Table 6 Analysis shows Ambeekas comparative financial ratios for operational years 20012006. The increasing return on equity figures demonstrate that Ambeeka does not plan to seek further external capital to expand the Karagwe. operation inThe return on assets figures do not increase as substantially, because this analysis assumes that Ambeeka expend any cash during the first six years of does not operation. Table 6. Financial Ratios 2001 2002 2003 2004 2005 2006 Profitabilit y ost of Kits Sold 0.00% 19.04% 22.84% 28.55% 38.07% 38.07% C Operating Expenses 74.79% 30.69% 15.67% 10.50% 9.98% 10.16%Margin -74.75% 14.57% 44.97% 51.04% 44.63% Gross 45.86%Margin -74.75% 8.74% 26.98% 30.63% 26.78% Profit 27.52% on Equity -6.30% 2.21% 17.05% 38.70% 50.76% Return 78.23% on Assets -6.36% 1.99% 11.18% 16.77% 15.87% Return 17.11% Activit y otal Asset Turnover 0.09 0.23 0.41 0.55 0.59 0.62 T Fixed Asset Turnover 0.12 0.39 1.13 2.63 4.74 8.88 Liquidity Quick Ratio 4.19 2.14 1.53 1.40 1.46 1.49 Ratio . There are no comparable businesses that release their financial ratios to the public. Most of Comparisons rural the activity in the development industry is driven and subsidized by industrialized governments and World contracts. There are several private enterprises that have been largely successful in this realm, but their Bank financial statements are not available for comparison. 16

Financial Risks1 7 Currency . All of Ambeekas revenues will be collected in Tanzanian shillings, and almost every collected will be converted into U.S. dollars in order to meet the companys major expense accounts. Translation have toshilling Although the Tanzanian shilling has deflated considerably against the dollar over the past eighteen months, this trend may continue. As far as the founders know, there are no market-based instruments available for hedging this currency not risk.such, all financial forecasts assume that Ambeeka will lose 5% of its revenue to currency exchange As expenses. In order fluctuations and to minimize exposure, almost all collected Tanzanian money will be immediately converted into dollars by establishing a corporate forex account at the Tanzania National Bank. This account will U.S. currency allow for exchange at a competitive market rate, and will also enable Ambeeka to automatically wire transfer all funds into a corporate account at either Citibank or the Chase Manhattan Bank in Denver. This will be directly short-term Ambeekasanswer to contending with currency risk. For the long-term, Ambeeka will neutralize currency risk by diversifying its operations and holdings into other areas of the world. Political and Economic . The countries surrounding Tanzanias western border have experienced a great of strife characterized by anarchy, exodus, bloody violence, and massive inflation. In Stability over the past ten years, deal Tanzania, these regional pressures have contributed to high unemployment and double-digit inflation. Nevertheless, demonstrated Tanzania has 38 years of political stability, during which time the government has transferred power peacefully on three different occasions, most recently in 1994. There is a substantial World Bank presence in Tanzania, as well as in and Uganda. The Tanzanian government has set up an Investment Center to aid foreigners in identifying Kenya lucrative opportunities in Tanzania. Consistent with this measure, the government has also adopted extremely liberal tax import laws in an effort to attract foreign investment. Ambeeka is confident that the political and economic and climate inis becoming more and more favorable for business every day, and that real progress is being made to Tanzania Tanzanias economy and infrastructure from the instability occurring in neighboring protect regions. Coffe . Karagwe residents depend heavily on coffee for their revenue. Economically, coffee harvests can be e climate or market prices, and this cannot be ignored as a potential threat to Ambeekas success in affected by However, Karagwe. Ambeekas presence in Karagwe will drastically improve the regions prosperity, and the community center to spark an entrepreneurial spirit by providing new opportunities for small business in Karagwe. In will help Ambeekas commitment for a long-term, value-enhancing presence in Karagwe will itself significantly short, neutralize this the community to diversify and expand its economy. Furthermore, Ambeeka will explore the risk by helping of accepting possibility coffee as payment for solar kits, which might prove to be another effective strategy for neutralizing translation currency risk. Cross. There is an operational risk inherent whenever a company in one country attempts to do another. distance Cultural This business in risk will be mitigated in Karagwe through the partnership with CSEW, which will handle all operations of the business. Additionally, Ambeeka will maintain a full-time Colorado-based staff, as day-to-day an expanding travel budget, so that Karagwe, and future sites in other countries, will be visited on a regular well as basis. Exit Strategy This proposed project in Karagwe will require a long-term commitment. In Karagwe, Ambeeka will generate flows cash that will be used to finance project expansions into other areas of the world, such as West Africa, Asia, and Latin America. Once Ambeekas concept has been proven, and the potential for further growth demonstrated, most likely exit via a management buy-out. Another real possibility will be to take the company public. Ambeeka will Demonstrationand sustainable growth, combined with the establishment of a global brand name recognition, of substantial make this a viable exit option. In the past decade, several mutual funds have been established that explicitly invest should with environmental companies, and this demonstrates that there is a public capital market willing to purchase equity company like Ambeeka. In any case, Ambeeka does not foresee an exit occurring until at least in a 2006.

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For a com p reh e ns ive b a ckg ro un d o n t he ch al le ng e s o f c on d uc ti ng bu sin e ss in T an za ni a, pl ea se s ee th e a u th o rs p ap e r e n ti tl ed Tan za ni a: D eve lo p in g St ra te g ie s fo r

Ef f ec ti ve B us in es s Pra ct ice s, av ai la bl e in A do b e Ac rob a t f or ma t f ro m th e A mb e ek a w eb sit e , w w w .A mb ee ka . co m

17

Investment Mr. Spellberg Requirementshas already invested $8,000 in administrative, travel, and research expenses to write this business plan. near future, Ambeeka will require an additional $2,000 to $5,000 for incorporation and legal expenses, In the million Table 7 presents an itemized breakdown of plus $1 in seed venture financing to launch the project in Karagwe. the venture financing needed.

Table 7. Itemization of Investment Needed

Power 5,000 Watt Solar Array 50,000 Station 10,000 Watt Wind Generator 50,000 Power Conditioning Equipment 50,000 Power Storage Equipment 50,000 Security Equipment 10,000 Wiring and Connectors 10,000 Labor 30,000 Total Cost of Power Station $250,000 Community Coffee and Fruit Processors Center 175,000 Refrigeration & Freezing Equipment Computing and Telecommunications Center 80,000 Water Pumping Facility 60,000 100,000 Convention Center and Theatre Battery 20,000 25,000 Charging Station 2 Work Vans 20,000 Workshops 15,000 Office Space 5,000 Furniture 5,000 Security Equipment 5,000 Labor 40,000 Total Cost of Community Center $550,000 Total Power Station 250,000 Community Center Cash for 200,000 550,000 Operations Total Venture $1,000,000 Round B Investment

In addition, the company will seek assistance in further developing legal, distribution, marketing, and strategies financial for conducting business internationally. Therefore, Ambeeka will require significant strategic support, as well capital, in launching this as venture. Project Table 8 shows the valuation analysis for Ambeekas project in Karagwe. This estimation is based on expected Valuation net income in 2006 multiplied by a factor of three. This multiple reflects Ambeekas expectation that the services the community center will be 75% of total net income. This valuation analysis unequivocally confirms offered at Ambeekas provide a positive return to its investors. This is consistent with the companys mission statement, intention to mandates that Ambeeka profitabl empower underprivileged communities through the application of which will y RE.

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Table 8. Net Valuation Expected Revenue $2,843,100 Revenue Expected Total $8,529,300 Expected $11,372,400 Expected Profit Expected Net 27.52% $3,129,282 P/E Multiple 10 Expected $31,292,815 Discount Rate 50% Present Value, $2,243,115

Income-Based from Pre-Financing Program from Community Center Revenue Margin Income Valuation Year 2000

2006

Offerin A g mbeekas required $1 million capital investment will be obtained through a venture round financing period conducted half of 2000. Ambeeka will attempt to obtain the majority of this capital either from an during first project investment agency such E & Company, or in the form of a partnership with a large, multinational environmental corporation penetrating emerging markets. Ideally, this will be an electronics or telecommunications company interested in substantial financial, marketing, and legal resources. Potential corporate partners include companies such as that has General Philips, Sharp, Magnavox, Toshiba, Thompsons of France, and a host of streamlined, globallyElectric, telecommunications companies. Ambeeka will also seek and accept financing from private, accredited investors aggressive such as Angels, in accordance with all U.S. and Tanzanian securities business laws. Ambeeka will prefer to structure this investment agreement as an exchange of services partnership agreement, necessary, equity can and will be granted in return for capital. Because the founders want to maintain cash flows but, if forfuture project expansions, and not to buy back common stock, Ambeeka will attempt to retain 67% of its equity in in use control of management throughout both rounds of financing. Additionally, the company will explore the the possibility of partnership or equity investment with a loan from a government or non-profit relief agency such as leveraging a or the USAID Africa Project Development 18 Fund. The markets in which Ambeeka will operate have a tremendous long-term potential for economic development. the knowledge and the local contacts to bring electricity and prosperity to these regions. Eventually, Ambeeka has markets will develop a substantial demand for electronics, telecommunication, and information these technologies. Ambeekas ideal investor and/or corporate partner will have the vision and the desire to penetrate these markets and aggressively. They will have the resources to provide significant financial, logistical, operational, marketing, early and support. In exchange, a partner company will be granted exclusive supply and branding rights for all products legal services that Ambeeka offers. In addition, Ambeeka will actively help a partner company to market its product(s) and at the roots level by employing locals to build a loyal, long-term customer base within their communities. By grass underdeveloped communities with affordable and dependable electricity, Ambeeka will help pave the providing way for and economic development to permeate emerging markets all over the prosperity world.

18

Th e f in an ci al s ta t em e nt s in

Ap p e n d i x Ga ssu me th a t a ll ca p it al ra is ed is u sed t o p urc ha se e q ui ty

19

20

Karagwe

21

Simplified schematic diagram of a basic solar electric system, with arrows indicating direction of energy flow.

Photovoltaic Module

DC Load or Appliance

Battery

22

GLOBAL ENTREPRENEURIAL
Organization Type Location

RE E NTERPRISES

CAT Consultancy Profit Wales Cinergy Global Power Profit United Kingdom E & Company Profit New Jersey, USA Econergy International Corporation Profit Colorado, USA Energy & Environmental Ventures, LLC Profit New England, USA Energy Alternatives Africa Profit Kenya Power Resources, Ltd. Energy Profit England Non-Profit New England, Enersol USA Global Impressions, Ltd. Profit United Kingdom Hyder Profit Wales Intermediate Technology Consultants Profit United Kingdom Nykomb Synergetics AB Profit Sweden Plenum Energy Profit Germany PowerGen Profit United States Ramboll Profit Denmark Solar Bank International Profit United States Soluz Profit New England, USA SunTree Profit Israel Grameen Bank/Grameen Shakti The Non-Profit/Profit Bangladesh Insurance Profit United TradeWind States

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During the Summer of 1999, Mr. Spellberg conducted an informal survey of Karagwe citizens. As an American, it is difficult to obtain reliable information from people there, because they will always try to make themselves very poorer sound than they really are, in the hope of receiving a handout or sponsorship. Therefore, questions concentrated on qualitative measures rather than quantitative. In other words, discussion of actual dollar figures was Nevertheless, a good measure of Karagwes demand for solar electricity, and why it is not being met, was obtained avoided. from conversations. In some cases, a translator was used. The following questions were posed, generally in this these order:

1) What other electrical appliances do you own? 2) How do you feel about the currently available energy sources in 3) What Karagwe? do you know about solar energy? you know Gaspar 4) Do 5) Why Makale? is solar energy not used more readily in Karagwe? village do you live? 6) In which 7) How big is your house? 8) How do you light your house and power your radios? would you use solar energy for, if you could get 9) What it?

It is important to note that these questions notposed in a formal interview environment, but during conversation with almost every local that Mr. Spellberg met. Most of these conversations took place on the were casual streets, in restaurants, or on shuttle rides between villages. Overwhelmingly, the results of these bars and demonstrated conversations that, in Karagwe, solar power is viewed as an expensive luxury item that only the richest families possess. Furthermore, it was clear that almost every individual had a basic understanding of what solar energy is, and what it do. can The most important message of these conversations is that a tremendous latent demand for solar energy exists in and that the major obstacle impeding its widespread use is Karagwe, affordability.

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April .Ms. Allderdice has developed RE policy in Bangladesh, in Egypt, and in many parts of America. Allderdice She worked at NRELs International Programs Division for five years, and graduated from Solar Latin Energy Internationals RE education program. Most significantly, Ms. Allderdice was instrumental in aiding the Bank of GrameenBangladesh to develop a working micro-finance plan for solar electric systems. The Grameen model is now regarded to be the most successful solar leasing program in the history of the industry, and the bank has become the of one most fortuitous lending institutions in the world with a 95% pay-back rate. Ms. Allderdice is currently earning her degree at Columbia University in New York. Her experience developing a successful business plan to MBA affordable solar energy systems to families in Bangladesh will be extremely valuable to this bring project. Christy .Ms. Barnes has over six years of experience in the energy industry, as well as several Barnes experience in theyears development field. Currently, she is employed by Econergy International Corporation global where (EIC), she develops training curriculum for electric utility managers in developing countries. This curriculum, which implemented in Ghana, Brazil, and Mexico, teaches utility managers strategies for maximizing has been efficiency. Ms. Barnes is currently earning her MBA degree in Entrepreneurship and Marketing from the energy University of played an instrumental role in the preparation of this business plan, and, as one of Ambeekas Colorado. She accessible advisers, will maintain close involvement with Ambeeka in years to come. At some point in the future, most Ms. Barnes may join the companys full-time staff. Todd . Mr. Bartholf is a director at Econergy International Corporation (EIC), and has over twenty experience RE of Bartholf in theyearsindustry. During his impressive career, Mr. Bartholf has provided strategic planning, project development, and technical assistance as a consultant to numerous organizations all over the world. Prior to EIC, Mr. joining Bartholf served as a Senior Program Officer at Winrock International, a non-profit development assistance organization. While at Winrock, Mr. Bartholf spearheaded the development of RE projects in several Asian His advice countries. on technical and economic matters, as well as his contacts within the industry, will prove highly valuable to Ambeeka . Robert . Mr. Byrne is a British ex-patriot who has been installing solar electric systems off an on in eastern southern for Byrne Africa andten years. Currently, he is working with the Maasai people in Arusha, Tanzania, on a largescale project to electrify several remote community centers and schools on tribal lands. Mr. Byrne is literally in solar trenches, both as a system installer and integrator, and as a fundraiser. He has important contacts with nonthe government throughout Europe and Africa, and knows key RE producers and distributors. His assistance organizations Tanzanian with the government, with suppliers and distributors, and with private fundraisers, will prove vital to AmbeekasKaragwe. He will also serve as an ideal sounding board for idea success in testing. Francisco Delgado, .Dr. Delgado is a Professor of Finance at the University of Colorado. He specializes in area of Ph.D risk management, particularly as it relates to international finance and currency exchange. A native of the Peru, Professor Delgado has consulted for numerous banks in Latin America on currency hedging, and has financial developedstrategies to help these banks effectively conduct business across international borders. Professor Delgadosin this realm will help Ambeeka to manage the serious financial risks associated with doing expertise Tanzania business in . Mary Grady, .Ms. Grady has worked in the U.S. RE industry for over seven years in both the public and MBA Most recently, she worked for Kyocera Solar International, one of the worlds largest producers private sectors. technology, as well as for the U.S. Export Council for RE. She is now working for Winrock International. Ms. of PV Grady has lived and worked in Brazil, and knows the global RE industry as well as anybody. She will aid in strategies developingfor executing this business plan, and in locating potential investors.

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Peter Lilienthal, . Dr. Lilienthal is a Senior Economist at the National Renewable Energy Laboratory Golden, Ph.D Colorado. He has been the Senior Analyst of NRELs International and Village Power Program for nine (NREL) in years, worked in the RE field since 1978. He specializes in conducting feasibility and optimization analyses for and has projects in developing nations. Dr. Lilienthal will continue to assist Ambeeka by reviewing and editing the RE business providing fresh ideas and approaches, and by connecting Ambeekas management team with other key plan, by in the peopleindustry. Bernard .Mr. Oswego is a native of Kenya, and is the Chief Operations Officer at Energy Alternatives Oswego probably Africa pre-eminent large-scale RE consulting firm. He has seven years of hands-on (EAA), Kenyas installing experiencesolar electric systems. For EAA, Mr. Oswego evaluates project financing and feasibility, and negotiateswith the World Bank and other international lenders. He is fluent in Kiswahili, and knows key people in contracts African government, financial, and non-profit East organizations. Mick .Mr. Sagrillo, owner of Sagrillo Power and Light, has been designing, installing, repairing, and Sagrillo building wind generators for twenty years. He is perhaps the nations best-known specialist in the commercial wind industry, energy and has worked on RE development projects in 29 foreign countries. He has consulted for NREL, as well as other energy organizations all over the world, and has taught the wind energy class at SEI for the numerous years. past six In addition to serving as a consultant for the business plan, he has agreed to oversee the design and construction of Ambeekas power station and community center in Karagwe. Erich .Mr. Stephens served two years in Paraguay with the Peace Corps, and has since graduated from RE education program. He has consulted for the Nature Conservancy, and for the past two years has been Stephens SEIs instrumental in the establishment of a large-scale commercial wind power project in New England. Mr. Stephens has dedicated proponent of this project since its inception, and may join the Ambeeka management team as a fullbeen a time employee within a year. Johnny .Mr. Weiss has been an Executive Director of Solar Energy International (SEI), arguably the most RE training center, since 1991. He has been training people in RE installation since 1981, and Weissrespected worlds has thirty years of experience as a licensed general contractor in solar home building and design. During his nearly Mr. Weiss has taught solar installation in developing countries all over the world. He has agreed to assist with the career, on- design and construction of Ambeekas power station and community site center. Ron White, Ph.D . Dr. White is a Senior Analyst at NRELs International Programs Division. He has over twenty of experience advising and consulting on RE projects in sub-Saharan Africa, and has traveled extensively in the years region. of Ambeekas most accessible and supporting advisers, Dr. White will continue to provide As one criticism, new ideas, and liaison with potential consultants and constructive investors.

26

J ASON P. S PELLBER
1245 Acropolis Drive (720) 890-1330 Lafayette, Colorado, USA 80026 jspellberg@yahoo.com

OBJECTIVE To build Ambeeka Energy Solutions into a global provider of renewable energy products and services EDUCATION & E XPERIENCE University of Colorado at Boulder Boulder, CO Masters Degree in Business Administration Expected Graduation May, 2000 Major in Entrepreneurship; 3.7 cumulative GPA Awarded $3,500 in merit-based fellowships for study in Entrepreneurship Helped GlobalSolar, Inc of Wheat Ridge, CO develop a marketing strategy for introducing their solar module into East Africa as an independent project for MBA credit Teaching Assistant, MBA Business Statistics course
Columbia Solar Electronics Workshop Karagwe, Kagera, Tanzania Summer Internship June August, 1999 Conducted the feasibility analysis for the Ambeeka business concept Forged a business partnership with Gaspar Makale, Tanzanias leading installer of solar electric systems Made contacts with key industry people including Mark Hankins, Bernard Oswego, and Robert Byrne, as well as officials at the Karagwe Development Association (KARADEA), the Tanzania Foreign Investment Center, the Tanzania Revenue Authority, the Tanzania Electric Supply Company, and the Africa Projects Development Fund Solar Energy International Carbondale, CO Renewable Energy Education Program June August, 1998 Completed coursework in PV system design and installation Helped to install a 1.5 kW grid-tied PV system on a home in Edwards, CO Completed coursework in the fundamentals of wind generator operation and installation Helped to install a 1.5 kW wind generator on a remote home near Fairplay, CO Amgen, Inc. Boulder, CO Department of Inflammation November, 1993 May, 1998 Research Associate in Cell Biology & Immunology Worked on over 20 project teams to develop novel therapeutics for treating inflammatory diseases Responsible for researching the effects of drugs on cells and organ systems, reporting data at team meetings, contributing to strategies for drug development, and coordinating cell biology research efforts with those of other departments Supervised 3 student interns to help with research and project implementation Wrote 2 and co-authored 7 scientific papers Promoted twice for ability to work in teams, handle multiple responsibilities, conduct sound science, function without supervision, and take primary initiative Presented data in front of 200 cell biologists at the international Keystone Symposium Northwestern University Evanston, IL Bachelors Degree in History & Immunology Graduated June, 1993 Chairman of fraternity Rush committee; led the most successful recruitment program on campus Chairman of Philanthropy committee; led an effort which raised $82,000 for diabetes and ALS research, and honored by the Saturn Corporation for dedication to community service

ADDITIONAL

INFORMATION Skilled in Microsoft Office, including Access databases, as well as using Excel spreadsheets for financial analyses and optimization modeling (maximizing profits or minimizing costs using the Solver function) Written and conversational literacy in Spanish Able to travel extensively, and to remote locations (have been to 17 countries on 4 continents); selfsufficient and culturally adaptive
27

Pricing Strategy and Sales & Revenue Forecasts

Pricing of Financing Contracts Kit 1 Kit 2 Kit 3 per month per contract per month per contract per month per contract Price $24.00 $288 $48.00 $576 $72.00 $864 Gross Profit Margin 72.46% 80.00% 94.59% Anticipated Sales Breakdown Kit 1 Kit 2 Kit 3 Percent of Total Sales 85% 13% 2% Sales Forecasts 2001 2002 2003 2004 2005 2006 Sales Growth Rate 200% 150% 100% 50% 50% Kit 1 Sales 213 638 1,594 3,188 4,781 7,172 Kit 2 Sales 33 98 244 488 731 1,097 Kit 3 Sales 5 15 38 75 113 169 Total Kits Sold 250 750 1,875 3,750 5,625 8,438 Total Customers Served, 2001-2006 20,688 Revenue Forecasts 2001 2002 2003 2004 2005 2006 Kit 1 $61,200 $183,600 $459,000 $918,000 $1,377,000 $2,065,500 Kit 2 $18,720 $56,160 $140,400 $280,800 $421,200 $631,800 Kit 3 $4,320 $12,960 $32,400 $64,800 $97,200 $145,800 Total Revenues $84,240 $252,720 $631,800 $1,263,600 $1,895,400 $2,843,100

Cost of Kits Sold and Inventory Holding Schedule

Cost of Kits Sold Kit 1 Kit 2 Kit 3 Description Cost Description Cost Description Cost Photovoltaic Module 13 Watt $69.00 30 Watt $125.00 48 Watt $171.00 Battery 12 V, 20 Amp-Hr $20.00 12 V, 60 Amp-Hr $60.00 12 V, 100 Amp-Hr $100.00 Charge Controller 2.5 Amp $30.00 5 Amp $50.00 5 Amp $50.00 Loads 1 light, 1 radio $10.00 2 lights, 1 radio $15.00 3 lights, 1 radio $20.00 Connectors & Wiring $15.00 $25.00 $35.00 Mounting $10.00 $15.00 $20.00 Shipping (Whole Kit) $13.00 $30.00 $48.00 Total Cost $167 $320 $444

Inventory Holding Schedule 2001 2002 2003 2004 2005 2006 Inventory at Beginning of Year 0 250 750 1,875 3,750 5,625 Kits Installed During Year 0 250 750 1,875 3,750 5,625 New Kits Ordered at End of Year 250 750 1,875 3,750 5,625 8,438 Inventory at End of Year (Units) 250 750 1,875 3,750 5,625 8,438 Inventory at End of Year (Value) $48,108 $144,323 $360,806 $721,613 $1,082,419 $1,623,628

28

Consolidated Pro-Forma Financial Statements, 2001--2006

Income
2001 2002 2003 2004 2005 2006

Statement Revenue $84,240 $252,720 $631,800 $1,263,600 $1,895,400 $2,843,100 Cost of Kits Sold $0 $48,108 $144,323 $360,806 $721,613 $1,082,419 Gross Profit $84,240 $204,613 $487,478 $902,794 $1,173,788 $1,760,681
CSEW Contracting Fee $5,000 $10,000 $20,000 $40,000 $80,000 $160,000 Administrative Expense $44,000 $52,800 $63,360 $76,032 $91,238 $109,486 Maintenance Expense $3,000 $3,150 $3,308 $3,473 $3,647 $3,829 Marketing Expense $3,000 $3,600 $4,320 $5,184 $6,221 $7,465 Insurance & Security Expense $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 Total Operating Expenses $63,000 $77,550 $98,988 $132,689 $189,106 $288,780 Operating Profit $21,240 $127,063 $388,490 $770,105 $984,682 $1,471,901 Currency Exchange Loss $4,212 $10,231 $24,374 $45,140 $58,689 $88,034 Depreciation Expense $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 Earnings Before Income Taxes ($62,972) $36,832 $284,116 $644,965 $845,992 $1,303,867 Income Tax Expense $0 $14,733 $113,646 $257,986 $338,397 $521,547 Net Income ($62,972) $22,099 $170,470 $386,979 $507,595 $782,320

Balance Sheet Assets

2001 2002 2003 2004 2005 2006

Cash $221,874 $328,492 $603,437 $1,106,318 $1,716,810 $2,629,063 Inventory 48,108 144,323 360,806 721,613 1,082,419 1,623,628 Total Current Assets 269,982 472,815 964,244 1,827,930 2,799,228 4,252,691 Property, Plant, & Equipment $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 Accumulated Depreciation $80,000 $160,000 $240,000 $320,000 $400,000 $480,000 Net Fixed Assets $720,000 $640,000 $560,000 $480,000 $400,000 $320,000 Total Assets $989,982 $1,112,815 $1,524,244 $2,307,930 $3,199,228 $4,572,691

Liabilities Accounts Payable $48,108 $144,323 $360,806 $721,613 $1,082,419 $1,623,628 Accrued Expenses $4,846 $5,965 $7,614 $10,207 $14,547 $22,214 Accrued Taxes Payable $0 $3,400 $26,226 $59,535 $78,092 $120,357 Total Liabilities $52,954 $153,688 $394,647 $791,355 $1,175,057 $1,766,199 Stockholders' Equity $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 Retained Earnings ($80,972) ($58,873) $111,597 $498,576 $1,006,171 $1,788,492 Total Liabilities & SE $989,982 $1,112,815 $1,524,244 $2,307,930 $3,199,228 $4,572,691

Statement

of

Cash

2001 2002 2003 2004 2005 2006

Beginning Cash $200,000 $221,874 $328,492 $603,437 $1,106,318 $1,716,810 Flows Net Income ($62,972) $22,099 $170,470 $386,979 $507,595 $782,320 Change in Inventory (48,108) (96,215) (216,484) (360,806) (360,806) (541,209) Depreciation Add-Back $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 Change in Accounts Payable $48,108 $96,215 $216,484 $360,806 $360,806 $541,209 Change in Accrued Expenses $4,846 $1,119 $1,649 $2,592 $4,340 $7,667 Change in Accrued Taxes Payable $0 $3,400 $22,826 $33,309 $18,556 $42,265 Total Adjustments to Cash Balance $21,874 $106,618 $274,945 $502,881 $610,492 $912,253 Ending Cash $221,874 $328,492 $603,437 $1,106,318 $1,716,810 $2,629,063

29

Monthly Consolidated Pro-Forma Financial Statements, Year 2001

Income
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

Statement Revenue $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $84,240 Cost of Kits Sold $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Gross Profit $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $7,020 $84,240
CSEW Contracting Fee $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $5,000 Administrative Expense $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $3,667 $44,000 Maintenance Expense $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Marketing Expense $750 $0 $0 $750 $0 $0 $750 $0 $0 $750 $0 $0 $3,000 Insurance & Security Expense $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $8,000 Total Operating Expenses $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $63,000 Currency Exchange Loss $351 $351 $351 $351 $351 $351 $351 $351 $351 $351 $351 $351 $4,212 Depreciation Expense $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $80,000 Earnings Before Income Taxes ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($62,972) Income Tax Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Income Tax Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Income ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($62,972)

Balance

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sheet Assets Cash $206,669 $207,588 $209,257 $210,926 $211,845 $213,514 $215,183 $216,102 $217,771 $219,440 $220,359 $222,028 Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $48,108
Total Current Assets $206,669 $207,588 $209,257 $210,926 $211,845 $213,514 $215,183 $216,102 $217,771 $219,440 $220,359 $270,136 Property, Plant, & Equipment $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 Accumulated Depreciation $6,667 $13,333 $20,000 $26,667 $33,333 $40,000 $46,667 $53,333 $60,000 $66,667 $73,333 $80,000 Net Fixed Assets $793,333 $786,667 $780,000 $773,333 $766,667 $760,000 $753,333 $746,667 $740,000 $733,333 $726,667 $720,000 Total Assets $1,000,002 $994,255 $989,257 $984,259 $978,512 $973,514 $968,516 $962,769 $957,771 $952,773 $947,026 $990,136 Liabilities Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $48,108 Accrued Expenses $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 Accrued Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $5,000 $5,750 $5,000 $53,108 Stockholders' Equity $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 Retained Earnings ($23,748) ($28,745) ($33,743) ($39,491) ($44,488) ($49,486) ($55,234) ($60,231) ($65,229) ($70,977) ($75,974) ($80,972) Total Liabilities & SE $1,000,002 $994,255 $989,257 $984,259 $978,512 $973,514 $968,516 $962,769 $957,771 $952,773 $947,026 $990,136

Cash Flows

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Beginning Cash $200,000 $206,669 $207,588 $209,257 $210,926 $211,845 $213,514 $215,183 $216,102 $217,771 $219,440 $220,359 Net Income ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) ($5,748) ($4,998) ($4,998) Change in Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($48,108) Depreciation Add-Back $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 Change in Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $48,108 Change in Accrued Expenses $5,750 ($750) $0 $750 ($750) $0 $750 ($750) $0 $750 ($750) $0 Change in Acrd Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Adjustments to Cash $6,669 $919 $1,669 $1,669 $919 $1,669 $1,669 $919 $1,669 $1,669 $919 $1,669 Ending Cash $206,669 $207,588 $209,257 $210,926 $211,845 $213,514 $215,183 $216,102 $217,771 $219,440 $220,359 $222,028

Monthly Consolidated Pro-Forma Financial Statements, Year 2002

Income
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

Statement Revenue $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $252,720 Cost of Kits Sold $48,108 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $48,108
Gross Profit ($27,048) $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $21,060 $204,613 CSEW Contracting Fee $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $10,000 Administrative Expense $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $4,400 $52,800 Maintenance Expense $263 $263 $263 $263 $263 $263 $263 $263 $263 $263 $263 $263 $3,150 Marketing Expense $900 $0 $0 $900 $0 $0 $900 $0 $0 $900 $0 $0 $3,600 Insurance & Security Expense $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $8,000 Total Operating Expenses $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 $77,550 Currency Exchange Loss $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $1,053 $12,636 Depreciation Expense $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $80,000 Earnings Before Income Taxes ($41,830) $7,178 $7,178 $6,278 $7,178 $7,178 $6,278 $7,178 $7,178 $6,278 $7,178 $7,178 $34,427 Income Tax Expense $0 $2,871 $2,871 $2,511 $2,871 $2,871 $2,511 $2,871 $2,871 $2,511 $2,871 $2,871 $30,502 Income Tax Credit $16,732 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $16,732 Net Income ($25,098) $4,307 $4,307 $3,767 $4,307 $4,307 $3,767 $4,307 $4,307 $3,767 $4,307 $4,307 $20,656

Balance

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sheet Assets Cash $205,659 $218,604 $232,448 $240,551 $253,495 $267,340 $272,931 $285,875 $299,720 $305,311 $318,255 $332,100
Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $144,323 Total Current Assets $205,659 $218,604 $232,448 $240,551 $253,495 $267,340 $272,931 $285,875 $299,720 $305,311 $318,255 $476,422 Property, Plant, & Equipment $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 Accumulated Depreciation $86,667 $93,333 $100,000 $106,667 $113,333 $120,000 $126,667 $133,333 $140,000 $146,667 $153,333 $160,000 Net Fixed Assets $713,333 $706,667 $700,000 $693,333 $686,667 $680,000 $673,333 $666,667 $660,000 $653,333 $646,667 $640,000 Total Assets $918,993 $925,271 $932,448 $933,884 $940,162 $947,340 $946,264 $952,542 $959,720 $958,644 $964,922 $1,116,422 Liabilities Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $144,323 Accrued Expenses $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 $7,063 $6,163 $6,163 Accrued Taxes Payable $0 $2,871 $5,742 $2,511 $5,382 $8,253 $2,511 $5,382 $8,253 $2,511 $5,382 $8,253 Total Liabilities $7,063 $9,034 $11,905 $9,574 $11,545 $14,416 $9,574 $11,545 $14,416 $9,574 $11,545 $158,738 Stockholders' Equity $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 $1,018,000 Retained Earnings ($106,070) ($101,763) ($97,456) ($93,690) ($89,383) ($85,076) ($81,310) ($77,003) ($72,696) ($68,930) ($64,623) ($60,316) Total Liabilities & SE $918,993 $925,271 $932,448 $933,884 $940,162 $947,340 $946,264 $952,542 $959,720 $958,644 $964,922 $1,116,422

Cash Flows

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Beginning Cash $222,028 $205,659 $218,604 $232,448 $240,551 $253,495 $267,340 $272,931 $285,875 $299,720 $305,311 $318,255 Net Income ($25,098) $4,307 $4,307 $3,767 $4,307 $4,307 $3,767 $4,307 $4,307 $3,767 $4,307 $4,307 Change in Inventory $48,108 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($144,323) Depreciation Add-Back $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 Change in Accounts Payable ($48,108) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $144,323 Change in Accrued Expenses $2,063 ($900) $0 $900 ($900) $0 $900 ($900) $0 $900 ($900) $0 Change in Accrued Taxes Payable $0 $2,871 $2,871 ($3,231) $2,871 $2,871 ($5,742) $2,871 $2,871 ($5,742) $2,871 $2,871 Total Adjustments to Cash Balance ($16,369) $12,945 $13,845 $8,102 $12,945 $13,845 $5,591 $12,945 $13,845 $5,591 $12,945 $13,845 Ending Cash $205,659 $218,604 $232,448 $240,551 $253,495 $267,340 $272,931 $285,875 $299,720 $305,311 $318,255 $332,100

31